Buckling Up the Business Traveler

Amy Baker Ward has been one of Midwest Express Airline's
frequent fliers for the past year-and-a-half, shuttling back and
forth between New York City and Milwaukee, Wisconsin, where she is
working on a software implementation project. Ward, a consultant
with Stamford, Connecticut-based Global Core Strategies, says she's
tried virtually every major carrier-but likes Milwaukee's Midwest
Express best.

"The two things I care about when I'm dealing with a hotel, a
car rental or an airline," she explains, "are that I get to where
I'm going and I'm not inconvenienced, and that I'm
comfortable."

Midwest Express satisfies on both counts, Ward says. Flights are
rarely late or canceled, but if there is a delay, the airline copes
better than most. "They always keep me informed and are very
courteous," Ward says. As for comfort, the airline's extra-wide
leather seats are so generously sized that Ward, who is five feet
tall, uses her briefcase to prop up her feet because they don't
reach the floor.

The company's intimate understanding of who its customers
are-and its detail-oriented attention to their comfort and
convenience-has ensured not only the loyalty of business travelers
like Ward, but also full planes. Midwest Express has turned a
profit for a remarkable 11 consecutive years, and revenues are
growing: $344 million in 1997, up from $304 million in 1996.

Analyzing the needs of business travelers is central to
Midwest's marketing and research strategy, and with good reason: a
May 1998 inflight passenger survey found that 55.1 percent of
Midwest customers were traveling for work-related reasons. "That
group is our primary target," says Tamara McClelland, Midwest's
director of marketing services and customer satisfaction. The
survey also found that 35 percent of the airline's fliers had an
annual income greater than $100,000. More than 53 percent were
between the ages of 35 and 54, and 57 percent were men.

An annual benchmark survey conducted via telephone concentrates
on company image and reputation awareness among frequent air
travelers. Focus groups, done roughly six times a year on subjects
ranging from dining services to service glitches, also offer
insight into the customer psyche. One recent group, for example,
addressed possible service failures such as a flight delay, and
asked participants to rate the appeal of various "recovery"
strategies, such as food served in the gate area or giveaways of
Midwest Express merchandise.

Two years ago, Midwest Express added customer value analysis
(CVA) to its arsenal of market research tools. "It's the next
generation of customer satisfaction research," explains McClelland.
"Typically, you're looking at yourself and how well you're doing at
satisfying your customers. With CVA, you look at yourself and your
performance relative to the performance of your competitors." As
part of its CVA analysis, Midwest Express asked customers what
factors were most important to them in selecting an airline, and
looked at how the company stood on these attributes against therest
of the market. "We always had a really good feel for what was
important to our customers," says McClelland, "but until we did
CVA, we didn't understand the relative weight of those attributes."
Now, the company can prioritize improvement efforts and tackle
business travelers' biggest concerns. On-time performance tops the
list.

Besides research, Midwest Express-a former subsidiary of
Dallas-based consumer products giant Kimberly-Clark-benefits from
decades of experience catering to finicky executive travelers. The
company, which became a commercial airline 14 years ago, evolved
out of Kimberly-Clark's corporate fleet of planes, dating back to
the 1940s. In fact, Kimberly-Clark's former chief pilot, Timothy
Hoeksema, is now Midwest Express' chairman and CEO.

Today the company has a fleet of 27 planes and maintains a
firmly Midwestern focus: Milwaukee is its main hub; Omaha,
Nebraska, is its second. Indeed, the airline nearly has the
Milwaukee non-stop market to itself. "Midwest is truly an oddball,
in the best sense of the word," says Edward Starkman, an analyst at
Warburg Dillon Read. "For the most part, they've escaped the focus
of other airlines because they lay low and are not aggressive
pricers."

Creature comforts According to Leonard Berry, professor of
marketing at Texas A&M University, Midwest Express recognizes
"the importance of humane values in a company, the importance of a
very strong service-oriented culture, the importance of knowing
your customer and figuring out what that customer wants and giving
it to them." The company's commitment to these humane values earned
it a place in Berry's forthcoming book, Discovering the Soul of
Service, to be published in February by The Free Press.

On Midwest Express flights, Berry says, "The passengers'
experience is fundamentally and perceptually different than it is
on other airlines." While Midwest offers only one service
class-coach-lots of leg room and extra-wide leather seats give
coach the look and feel of first class. There are no more than four
seats per row, which means no passenger has to endure a trip in the
dreaded middle seat. Flight attendants deliver hot, elegant dinners
of salmon and filet mignon on china, not plastic trays, accompanied
by linen napkins and complimentary wine.

Of course, the chardonnay isn't cheap-the airline spends $10 per
passenger meal, more than double the industry average-but Midwest
Express is hardly a company that is careless with cash, making the
stock attractive to investors and Wall Streeters alike. Analyst
Starkman points to the airline's highly productive workforce and
its frugal equipment decisions. Rather than investing in expensive
new airplanes, for example, it relies on carefully selected used
aircraft.

Such cost-effective measures may help Midwest weather the
turbulent times predicted for the business travel industry. An
October survey by the National Business Travel Association of 450
Fortune 1000 companies found that 56 percent of respondents had
reduced the number of employees traveling due to the general
economic downturn that began last summer. The study also reported
that 53 percent of respondents have replaced some travel with video
and teleconferencing, while 36 percent have adjusted corporate
travel policies to cut costs. Since there's usually not a long lead
time for business travel bookings, analyst Starkman predicts the
industry may not see a drop in ridership until early next year.

A focused marketing strategy will also steady Midwest's future
direction. "We're looking for upscale men," McClelland says
bluntly. To that end, the airline, which spent $1.9 million on
advertising in 1997, according to Competitive Media Reporting,
sponsors radio broadcasts of games for various sports teams,
including the NFL's Green Bay Packers and a local IHL hockey team,
the Milwaukee Admirals. The company's first-ever national cable
television spot, "How to Build the Perfect Airline," is airing on
ESPN, CNN, and A&E.

But despite its Midwestern base and small size, the airline can
hardly be called provincial. Itsplanes now fly to Orlando, New
York, Los Angeles, and other cities far from its hubs, and it is
slowly accumulating new routes. Recently the company added
Hartford, Connecticut-"very much a briefcase market," notes
McClelland -to its flight schedule.

Don't expect Midwest Express to rest on its customer-service
laurels anytime soon. To keep giving business customers the routes,
service, and other amenities they want, the airline plans to boost
its marketing research efforts even further next year. Rather than
surveying travelers on its aircraft twice a year, or via phone once
a year, says McClelland, "We're going to talk to them throughout
the year, every single month, every single week." This is an
airline clearly on course with its customers.